Lost earnings are calculated by comparing the plaintiff’s expected income with
actual income. For past losses (those that occurred prior to trial), this
calculation is usually based on the assumption that the plaintiff’s earnings
would have been in equilibrium. Plaintiff’s expected income is assumed to
include cost-of-living adjustments and scheduled promotions and raises but
does not include factors such as claims that the plaintiff was about to change
to a more lucrative occupation. This calculation is simple for employees and
persons in stable businesses. It becomes more difficult when it involves a
plaintiff in a transitory state. For example, assume that the plaintiff is just
starting a private medical practice. He has been in business six months when
he is severely injured in an automobile accident and he is unable to return to
work. If it takes four years for his case to go to trial, he will be entitled to the
earnings he lost during that period. His income during the first six months of
practice probably will not be representative of what his earnings would have
been when the practice was fully established. In this case, the plaintiff’s
counsel will need to present projections of his client’s potential earnings
capacity.

Future earning capacity is what the plaintiff might have earned had the injury
not occurred. The damages would be this earning capacity minus projected
earnings in the injured condition. This is not always a positive number. If,
because of injuries, the plaintiff was retrained for a higher paying job, he or
she may have no damages attributable to lost earning capacity. If the plaintiff
is well along in life in a dead-end job, then his or her future earning capacity
may simply equal present wage plus cost- of-living adjustments.

The difficult cases involve plaintiffs starting their careers. These cases require a
balancing of the plaintiff’s goals against the probability of his or her achieving
those goals.

Assume that the plaintiff has suffered a head injury that makes it impossible to
do any job more demanding than manual labor. If the plaintiff is a successful
surgeon, then his future earning capacity is fairly certain, as is his potential
professional lifetime. Assuming a net income of $200,000 per year and 25 years
until retirement, minus a potential income of $5,000 per year as a laborer, a
first- level approximation of lost earning capacity would be ($200,000–$5,000)
× 25, or $4,875,000. If he is a first-year medical student, it is fairly certain that
he would have become a physician, but his level of future financial success is
much less certain. In this situation, the plaintiff’s future earning capacity may
be limited to the average income for physicians in general. If the plaintiff is a
freshman in college, then the probability of his becoming a surgeon is further
reduced, as is his ability to establish a high future earning capacity.

These assumptions about the uncertainty of the plaintiff’s future may cause the
jury to award him less money for lost future earning capacity, but they do not
prevent the plaintiff from putting on evidence to reduce the assumption of
uncertainty. If the college freshman is an honor student at Yale whose mother
is a prominent surgeon and there is evidence that he intended to join her
practice, the jury might assume that he had a high probability of achieving his
goals. Information that tends to convince a jury that the plaintiff’s goals were
both reasonable and personally achievable is key to a successful claim for a
large award for loss of future earning capacity.